There is so much to like about what the still-new Resources Minister
Gary Gray
revealed at Australian petroleum’s annual summit yesterday, what with research commissioned to avoid further “ill-informed interventions" driven by “ill-informed popularism", moves to simplify the approvals regime for offshore drilling and a demonstrable renewal of his commitment to consultative governance.

But, as curmudgeonly as it might seem, we really have to wonder at the disconnect between the government’s ever-evolving rhetoric, as refreshingly positive as its latest manifestation might be, and the grim, confusing detail of its past performance and future agenda.

Take coal seam gas, for example. And coal, too, for that matter.

The minister quite sensibly called on the gas industry to embrace the challenge of building consensus in its culture clash with the small, noisy and politically influential alliance of resistance to unconventional gas that has been crafted between east coast pastoralists and the environmental lobby.

Gray, a former Woodside man, helpfully urged an industry now investing $80 billion on the capacity to turn gas from the Bowen and Surat basins of Queensland into an export LNG industry, “to argue its case in every possible way".

Having noted that gas drillers have successful negotiated 3780 land access agreements and that the industry with government is delivering research so that the ground water systems that so concern the CSG refusniks are better understood, Gray said:

“Without industry taking up this message with vigour and courage, fewer and fewer politicians will be able to prosecute sensible, logical, science-based policy and sustainable regulatory solutions."

Which is all very well, but Gray is working in a government that intends to give the environment minister new powers to review and delay coal seam gas and coal projects on the basis of their potential impact on water systems.

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And it might well be that Gray’s people offer support for a belatedly attached amendment to legislation currently before the Senate that apparently seeks to remove the ability of the Commonwealth to enter into bilateral approvals with state governments on matters relating to water use.

The amendment, introduced by the venerable New England independent
Tony Windsor
, late in the Bill’s original round of Parliamentary review, would seem to put a roadblock before any future attempt to streamline environmental approval process.

This represents a shift inconsistent with the government’s rejection of a failed Greens legislative initiative of 2012 and a not-so-subtle rejection of the Hawke Review of the Environmental Act, which embraced bilateral pathways to efficient process.

Through our contentious cycle of Labor governments the time it takes to get a minerals or energy project approved has doubled to somewhere between three and four years. The addition of a water trigger to the environmental approval process for coal and the gas its deeper seams produce will, at best, add uncertainty and, at worst, game-changing delay to new investment proposals.

But the trouble does not end there. Because under the minister’s new water trigger, operations risk losing the protection of existing Commonwealth authorisations whenever a specific state environmental approval requires change or re-assessment.

The need to extend or change state approvals is a fact of life for the owners of any major mines. And, if the government gets its way, every time an operation needs to renew its regulatory mandate, it will trigger a Commonwealth referral.

So, the story here is that the Commonwealth should ready itself for a flood of referrals from both greenfields and brownfields operations. And the Windsor amendment seems constructed to maximise regulatory paralysis by constraining the ability of the Commonwealth and its states to recover any sort of bilateral efficiency.

The risk posed by the Windsor amendment was spelled out by BHP Billiton in its submission to a Senate committee review of government’s package of changes to the environment act. “The existing provisions relating to Approval Bilateral Agreements in the EPBC Act make very clear the standards and requirements that must be met before the Minister can enter into a bilateral agreement. These existing provisions, which include a legislative process that adequately assesses the impacts on matters of National Environmental Significance, ensure that the necessary checks and balances are in place so that bilateral agreements are appropriate and rigorous whilst maintaining environmental protection standards.

“The Bill contains provisions . . . which would remove the ability for the Government to enter into an Approval Bilateral Agreement for the water resource matter of National Environmental Significance.

“Such a move would restrict future opportunities and efforts to streamline the environmental assessment process in Australia – a move that would be contrary to both current government and Coalition policy and the policy direction of the recommendations of the Hawke Review of the EPBC Act."

Standing in obvious contrast to the regulatory confusion promised by the water trigger and its Windsor amendment is the one-stop-shop solution offered to the offshore exploration industry yesterday by Minister Gray. The idea seems to be that the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) will be empowered to “assess and approve" exploration and appraisal drilling “as a streamlined way of meeting the environmental requirements of the EPBC Act".

This would leave NOPSEMA able to “provide a central point for regulation . . . leading to better outcomes for the industry and ensuring the strongest protections for our marine environment," according to the Minister.

The other interesting initiative offered by Gray yesterday was a study into the rapidly shifting tectonics of the east coast gas industry. Now, in times past, we may have greeted this sort of idea with equal measures of fear and cynicism. But the language Gray used to introduce his proposition was nothing but encouraging. Australians needed to be “well informed if we are to seize the opportunities available to us," Gray said.

The other clear positive to be drawn from Gray’s speech is that he seems to have little time for the contentious proposition that is the reservation of gas for domestic markets. Having urged gas producers and users “to work c-ooperatively to negotiate domestic contracts", Gray pointedly observed that these deals needed to be pursued on the understanding that “prices are no longer at historic lows".

“These are complex issues, but the government has a responsibility to take policy decisions on the basis of a strong understanding of what is actually occurring rather than running the risk of policy being driven by ill-informed populism."

In other words, the best way to reserve a share of Australia’s gas abundance is to pay the market price.

Just before we close, we have received several requests for detail on the nature of the fines being faced by the CFMEU in the wake of the Supreme Court’s contempt of court findings last Friday.

The court will hear the opening round of submissions from the Victorian government this morning and it is our understanding that the severity of those potential fines is a matter for the court alone and that there are no actual floors or ceilings to the penalties.

After that matter is decided, Grocon will pursue its own civil damages against the union.

That process might not kick off this calendar year and it could be further delayed if the union appeals either last Friday’s decision or, the size of the penalties.

But, if Friday’s judgement stands, it would seem likely that Grocon’s claim would be based, for a start, on the estimated $500,000 a day cost of the siege.

Given four days of the infamous CBD blockade have been deemed in contempt of court, that offers a starting point of $2 million.